The Tax Cuts and Jobs Act was signed into law Friday, December 22, 2017.
While it’s still too early to judge one way or the other how this new legislation will impact the housing market and real estate industry, we urge all consumers to remain aware and informed.
Tax Cuts and Jobs Act: The Top 6 Housing-Related Items You Should Know About
Here’s a breakdown of what we feel are some of the most important housing-related aspects of the Tax Cuts and Jobs Act:
1. Mortgage Interest Deduction
- Reduces limit on deductible mortgage debt to $750,000 for new loans.
- Current loans up to $1 million are grandfathered.
- Homeowners may refinance mortgage debts existing on 12/14/2017 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount refinanced.
- Repeals deduction for interest paid on home equity debt through 12/31/2025.
- Interest is still deductible on home equity loans if proceeds are used to substantially improve the residence.
- Interest remains deductible on second homes, subject to the limits.
2. Mortgage Credit Certificates
- Retains the availability of Mortgage Credit Certificates, commonly referred to as MCCs.
3. State and Local Taxes
- Allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes.
4. Student Loan Interest Deduction
- This deduction is retained in the new legislation.
5. Moving Expenses
- Repeals moving expense deduction and exclusion, except for members of the Armed Forces.
6. Exclusion of gain on sale of a principal residence
- There is no change in code.
- The new legislation retains the previous law, under which a typical owner, who has lived in their house for at least 2 of the last 5 years, would pay nothing in capital gain taxes if they sell the house.
Learn More About the Tax Cuts and Jobs Act
Read the Full Legislation Text at Congress.gov
- Read the entire Enrolled Bill, view all actions and amendments, and get more information from the official website for U.S. federal legislative information. Visit www.congress.gov to learn more.
Talk to Your Tax Advisor
- You should consult your tax advisor or a qualified tax professional for questions about your taxes, including questions about how this new legislation may impact how you file in the future.
Speak with a First Heritage Mortgage Loan Expert
- We are here to help answer any questions you may have related to your First Heritage Mortgage loan, put you in touch with a qualified tax professional in your area, or assist with other needs related to your specific financial situation. Get started at www.firstheritagemortgage.com.